Many people are undoubtedly wondering why a guy who loves to blog about cryptocurrency and the stock market is a basic income advocate.
I explain my support for basic income and describe some of its benefits in the questions below. Hopefully, you will learn something from this exercise in explanatory writing.
Question: Why do you support basic income?
Answer: I am basically a libertarian that dislikes and distrusts big government. I was looking for a means of redistributing wealth without expanding government or bureaucracy. Basic income achieves that goal.
Question: Why do you think wealth redistribution is necessary?
Answer: Capitalism does not benefit most people in today’s economy. Jeff Bezos reportedly has a $150 billion fortune while the average American’s household income is lower than it was in 2000. Hatred of capitalism is growing.
Basic Income is Capitalism for Everybody
Question: So basic income is necessary to save capitalism from itself?
Answer: Yes. Wealth should be redistributed so capitalism benefits everybody. If it is not anti-capitalist ideas like socialism and Marxism will become popular.
Question: Is basic income socialism?
Answer: No under socialism, government owns or controls business. The basic income is a wealth redistribution mechanism. Under it most business would still be in private hands. I want to change the way it distributes the profits.
The best way to think of Basic Income is as capitalism for everybody. In today’s America only a few people enjoy capitalism, even though it is generating more wealth than ever. I want everybody enjoying capitalism, not just Jeff Bezos and Ivanka Trump.
Question: So you regard basic income as a defense against socialism?
Answer: Yes. Socialism is becoming real popular in America again because most people are getting nothing from capitalism. We need to change that if we want to stop socialism.
Universal Basic Income is Dumb
Question: You never use the phrase Universal Basic Income why?
Answer: I hate how it sounds. It is a stupid acronym UBI and a horrendous idea. The government will distribute a universal basic income to everybody that includes billionaires. That would be stupid and unfair. I prefer the phrase basic income or progressive basic income.
Question: What is a progressive basic income?
Answer: A basic income paid to a majority of the population regardless of age including most of the middle class. Most people would receive the progressive basic income, including the elderly and the vast majority of workers.
Question: Why would you pay it to most people?
Answer: To build ensure sustainability. The most successful benefit programs like America’s Social Security and Medicare, Canada’s Medicare, the British National Health, and the Alaska Permanent Fund Dividend reach most of the population.
If program benefits most voters, politicians will fight to preserve it to keep their jobs. In the UK, even Maggie Thatcher was afraid to touch the National Health.
A welfare program that only helps the poor is fair game for every politician in town. America’s Social Security system is intact even though it’s eighty years old. The Great Society welfare system lasted less than 30 years because it only reached the poor.
The poor are less likely to vote and they do not write checks to political campaigns. Therefore, politicians have no incentive to pay attention to the poor and face no consequences if they demonize them.
Progressive Basic Income
Question: You say the Progressive Basic Income will be paid out regardless of age. Does that mean the elderly and children will receive it?
Answer: Yes and no. All senior citizens that met the parameters would be eligible for the Basic income.
Children under 18 would not receive the basic income. Their parents or guardians would receive it.
Question: Why a basic income for children?
Answer: Parenting is the most important job on Earth. It is also one of the hardest and most people do not get paid for it.
Most Americans take a huge cut in income by having kids and caring for them. Mothers earn less and have fewer opportunities for career advancement. Men have to take time off from work to be good fathers. We need to reward people for that.
The situation is even worse for the poor, single parents, and families in rural areas. Those people need a support system.
Basic Income and Social Security
Question: Would basic income replace Social Security?
Answer: No, it would augment it. Most people would get both the Social Security and basic income. That means most Social Security recipients would earn more with Basic income.
Question: How would you determine eligibility for basic income?
Answer: I would base it on individual income. The National Median Household Income is $59,055 a year. I would pay the Basic Income to any individual whose income was under that amount or $60,000 a year.
Question: Why are using the National Median Household Income as a parameter?
Answer: That way we would reach most of the population. The goal is to share the benefits of capitalism with the average person. The St. Louis Fed estimated the Real Median Personal Income in the United States was $31,099 in 2016.
Therefore, almost all middle and working class Americans would receive the basic income.
All Working Class Americans would Receive the Basic Income
Question: Why is the eligibility capped?
Answer: Paying money to those enjoying the status quo is illogical. The goal of basic income is to share capitalism’s benefits with those who are not receiving them.
I might add it would be politically impossible to sell a basic income system that gave cash to billionaires to taxpayers. That’s what a Universal Basic Income would do and I am totally opposed to that.
Question: Why is eligibility determined on an individual and not a household basis?
Answer: To ensure that as many people as possible receive the basic income. This would reward families for having kids and ensure parents that stayed home to care for kids received compensation.
It will address some gender discrepancies. Women would be less dependent on husbands or boyfriends for income. A woman with two kids who wanted to leave an abusive relationship would have $1,500 a month in income she could use.
$500 a Month Basic Income
Question: Your basic income is $500 a month. Why that amount?
Answer: It is just enough to make a real difference for the average person. Yet it is not enough to discourage people from working. Nobody could live on that, but they would get some extra cash.
Question: Would basic income replace other welfare programs like food stamps.
Answer: No it would augment them. It would reduce demand for such programs because many people would no longer need them.
An obvious benefit is that the welfare state will shrink. I would concentrate social workers’ efforts on the needy.
We would still need traditional social services and programs like food stamps and public housing. Social workers would not lose their jobs.
Question: Would basic income get rid of poverty?
Answer: No. It would ease it.
Basic Income is Better than Government Spending
Question: Wouldn’t higher taxes and more government spending be a better means of dealing with income inequality than basic income.
Answer: No. Under our system there is guarantee government spending will reach the average person.
Congress would appropriate the money. That body will naturally distribute the funds to the people who make the biggest campaign contributions. For example, defense contractors.
Historically, Congress has distributed money to politically connected minorities such as businessmen or farmers not average people. Higher taxes without a basic income would be a blank check to Congress.
This is why tax cuts are so popular. Most people understand they will never see the money if it disappears into the black hole on Capitol Hill.
Question: You would oppose tax increases without a basic income? Why?
Answer: Probably. Our political system is already very corrupt because of the huge amount of money involved. Giving politicians more money would magnify the corruption.
That’s what a tax increase without an automatic spending structure would be. Giving politicians more money to play with, nobody wants that.
I envision the basic income as an automatic spending structure.
Basic Income is an Automatic Spending Structure
Question: How would such an automatic spending structure work?
Answer: Disperse the funds electronically to bank accounts or digital wallets. Since 81% of Americans have a bank account and 77% of them own smartphones, it would reach most people. We can give the minority that lack those things bank accounts or smartphones, or simply mail them a paper check each month.
Question: Can the government do that?
Answer: It already does. Uncle Sam pays Social Security to 61 million each month. The IRS sent 80% of taxpayers a refund in 2017.
The government is already great at paying money to people. The infrastructure and technology to disperse the funds exist. A basic income extends what we already have.
Basic Income is Better than Welfare
Question: Why is the basic income better than the traditional welfare system?
Answer: The traditional welfare state exists to empower bureaucrats and politicians. They decide who gets what.
In the worst cases, bureaucrats or politicians use welfare to force their values on other people. We need to end or at least reduce that.
Traditional welfare is both inefficient and unfair. Many people cannot get through the bureaucratic hurdles so they never receive the benefits they need. Others get good at working the system, so they receive benefits they do not need.
Paying out a flat basic income would be cheaper and more efficient.
Republicans will Embrace Basic Income
Question: Will we have a basic income in America?
Answer: It is inevitable. Most people want social and political stability and in today’s world a basic income would be the only way to achieve that.
Question: How far off is the American Basic Income?
Answer: My guess is 10 to 15 years. My prediction is we will have to go through a period of serious social and political upheaval and possibly a catastrophe like the Great Depression to convince most people of the need for Basic Income.
Question: Which major American political party will promote Basic Income?
Answer: Ultimately both parties will, but I think Republicans will take the lead. They will need something with popular appeal to replace their failed Neoliberal economics.
Basic income will be a natural fit for them, especially if income inequality undermines law and order. Republicans like order. They will embrace anything that preserves it.
The only President to put a basic income before Congress was Richard Nixon, and he was a Republican.
The social services infrastructure benefits Democrats. They draw a lot of support from the government employees’ unions which are afraid basic income will kill their jobs.
My guess is that a lot of Republicans will embrace Basic Income once they realize it will reduce bureaucracy and the size of government. Democrats will come around once they see voters like Basic Income and want more.
Will Basic Income Replace Jobs?
Final Question: Will basic income replace jobs as most people’s source of money?
Some smart people like Elon Musk have raised the possibility that automation might create a future without work. Musk seems to believe basic income will replace jobs as most people’s source of support at some point. Is that possible?
Answer: That’s a hard one. Yes. It is entirely possible that automation or robots will kill most jobs. Therefore, a basic income financed by a tax on robots might be necessary.
My take is that the future without work is a long way off but we should think about it. A limited basic income like the one I envision would be a good way to prepare for that.
Despite that, technological unemployment and underemployment are growing problems right now. A lot of jobs are already vanishing and many more will die soon.
We need to recognize that fact and deal with it. Basic income is a good way to help the victims of technological unemployment.